ADA launches 12 projects in Central America and Dominican Republic to help vulnerable populations adapt to climate change
ADA launched 12 projects with microfinance institutions under the Inclusive Climate Finance Initiative (ICFI) programme in one of the regions of the world which is most affected by climate change. As a result of these projects, vulnerable populations in Central America and the Dominican Republic will have increased access to finance and will be able to adopt climate adaptation solutions and strengthen their resilience.
These communities are among the hardest hit by climate shocks, but despite the urgency of the situation, adaptation funding is not reaching them, exacerbating income losses, debt and essential expenditure (food, health, education). In addition, barriers persist throughout the financing chain: a limited and fragmented project pipeline; high origination, due diligence and structuring costs; relatively long maturities; opaque performance and cash flows; and adaptation outcomes that are still rarely measured or comparable.
ICFI aims at addressing these barriers by providing targeted technical assistance to financial service providers (FSPs) that directly support vulnerable populations in adapting to climatic challenges. Together with local partners, ADA will increase the FSPs’ capacity to not only access, manage and distribute climate finance but also to offer and implement effective climate adaptation solutions. To this end, green financial products will be developed to meet the specific needs of both the FSPs and the local population. The accountability of the FSPs towards investors will be improved by implementing global impact measurement, climate risk disclosure and reporting practices as well as traceability monitoring of supply chains to enable third-party verification of environmental claims.
The programme is now active in the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua in collaboration with local partners: Banco Adopem, Banco Múltiple Ademi, Banco Integral, PADECOM Credito, CREDICAMPO, Fundación Genesis Empresarial, FAFIDESS, Fundación Covelo, Confianza SA-FGR, ODEF Financiera, FDL and FUNDENUSE.
Shedding light on the projects
While each project has been tailored to the specific context and needs of the participating FSP, the initiatives share a common objective: enabling vulnerable populations in Central America and the Dominican Republic to better adapt to climate change through improved access to finance and climate-resilient solutions.
Together, the projects address key barriers that currently prevent climate finance from reaching vulnerable communities. Their activities can be grouped into five complementary areas of intervention.
1. Embedding climate resilience into institutional strategies
Several partner institutions are integrating climate resilience into their core strategies, policies and operations. Banco Adopem, Banco Integral, Banco Múltiple Ademi, FAFIDESS, FDL, Fundenuse and ODEF are strengthening governance, internal processes and staff capacities to better respond to the growing climate challenges faced by their clients.
2. Developing financial solutions for adaptation
The programme supports the development and strengthening of financial products and services that help vulnerable populations invest in climate adaptation solutions. Institutions such as Banco Adopem, Banco Múltiple Ademi, Credicampo, FAFIDESS, ODEF, Fundenuse and PADECOM Crédito are adapting their offerings to promote climate resilience and support sustainable livelihoods.
3. Strengthening climate risk management
Several projects focus on improving the understanding and management of climate-related risks. Through climate vulnerability assessments, client segmentation and enhanced risk management tools, Banco Integral, Fundación Genesis Empresarial, FDL, Banco Adopem, Fundenuse and ODEF are building their capacity to identify vulnerabilities and design more targeted adaptation responses.
4. Improving transparency and impact measurement
To increase accountability and attract climate finance, participating institutions are strengthening their reporting and monitoring systems. This is being done through the adoption of green taxonomies, impact measurement methodologies and portfolio traceability tools. As a result, Banco Múltiple ADEMI, Credicampo, FAFIDESS, FDL, Fundación Genesis Empresarial, Fundenuse and ODEF will be better equipped to demonstrate the results and environmental benefits of their investments.
5. Unlocking access to climate finance
All projects focus on increasing the flow of climate finance towards vulnerable communities. Fundación Covelo is strengthening its role as a regional channel for climate finance, Confianza is developing a guarantee mechanism to support climate-resilient investments, and Credicampo, PADECOM Crédito and other participating institutions are strengthening their readiness to engage with investors and access climate funding opportunities.